Compania Fundidora de Fierro y Acero de Monterrey, S. A.

Compania Fundidora de Fierro Y Acero de Monterrey, S. A., used the proceeds from this transaction, together with funds raised through issuance of additional common stock and borrowings from the export-import bank, for capital expenditures in connection with the company's expansion program. The expansion program, begun in 1964, was expected to increase steel ingot capacity from 500,000 to 750,000 metric tons per year by the end of 1966. The program included the addition of a new blast furnace, two new open hearth furnaces, a tandem cold mill, new billet mill facilities, complementary units, and additions to the company's raw material facilities. Finishing capacity was expected to be near 1,000,000 tons per year at the completion of the program. The new blast furnace was to enable the company to produce enough pig iron to serve 1,000,000 tons of finishing capacity. This expansion program improved the efficiency of the company's operation by enabling it to retire the older of its blast furnaces and to expand its flat-rolled production, which was, at the time of the deal, the most profitable part of the company's product line. In addition, the program was designed to allow Fundidora to expand total integrated steel production further, from 750,000 tons to 1,000,000 tons at a later date. The company was also studying the modernizing and expanding of its rail and structural mill. The implementation of these further expansion plans was to be phased to conform with the future development of the Mexican market for steel. As a result of the program, the value of net plant of the parent company was expected to rise 27.6%, from $107.8 million on December 31, 1965 to $137.5 million on December 31, 1967.